What's the deal with GAS?? Is it really costing that much more or is it that our dollar is worth so much less???

I've read so many opinions that I'm lost on where the truth is !!! The Saudi's say there is plenty of oil, no shortage they say, some say unregulated speculating is responsible for about 75% of the increase, and I've read that our dollar has lost somewhere near 35% of its value, so its causing the oil co's to charge more. Does anyone have some hard facts about this that they can share with us?

The Saudi's are saying they are producing enough oil but additionally say the problem is insufficient refining capacity. I don't have any info as to whether this is true or not.

I will say that the US dollar has devalued by 30% (relative to the Canadian dollar and Euro) since 1999. The price of oil is tied to the US dollar (though there has been speculation it will someday soon be tied to the Euro). In 1999 the price of crude oil/barrel was under $20. In the same currency adjusted for inflation it is over $120. The event which seemed to send oil prices skyrocketing was our response to 9/11. I am not an economist by any stretch of the imagination so I am only able to look at stats, not interpret them.

It's both. My grandmother, who practically raised me, was a CFO for an oil company for a couple years. Her husband was a geologist and designed offshore rigs. I don't have facts and I doubt anyone who knew the facts would tell us. But, I do recall numerous conversations about the industry.

Speculation is a huge issue and I would say that it's the major source in the rise of gas. Speculators aren't afraid of politicians because regulation scares the shit out of politicians. Why? Because it would mean even higher prices. Speculation is not just affecting the consumer, but also the industry itself. US Refineries are struggling and finding it hard to meet enough demand to cut a profit. This didn't just start recently. It's been happening since Oil-affecting green policies started to be presented in the Reagan era. Green policies mean major costs in the Oil industry.

The inflation rate is also a big factor. We import the majority of gas we use and that can only mean higher prices because we cant price it ourselves. OPEC doesn't help much as it's just another wasted conference between execs with nothing better to do. We're just lucky our exporters don't have more valuable currency, otherwise we'd be screwed.

The fear of Gas running out is real and affecting everything from all sides. Saudis say they're fine, but their wells will dry up just like Texas wells did. Until they feel they will not be fine, they will be of no help. Our government and industry is wasting time by conserving and pleading for a production boost in Oil. We need to move to something else. Again, as I've said before on other Forums, we need to move to ethanol. It's expensive now, because refining is unique and there aren't enough customers to support it. But, if we act large and fast we can have $1/gallon gas. Even less with different types of sugars being tested. Sugar will not run out and perhaps we can started sucking it out of our crops and livestock and put it into our gas tanks.

I watched T. Boone Picken interviewed on Bloomberg TV last week. He is of the opinion (and he is not the only one) that oil production is peaking. He believes that the Saudis are not being entirely truthful about the state of their reserves (they will not let anyone do an independent audit of their reserves).

If Mr. Picken is right (and he did not become a billionaire by being stupid) then the world economy could be in very serious difficulties in less than 50 years as oil production declines and demand continues to increase. Think of how much of the modern economy is tied to oil? Truly frightening. That is why the current and future US government's need to try and become less dependent on foreign oil, finding new oil fields will not do it nor will conserving a bit here and there. T. Boone Picken's ideas include using wind energy and solar energy to replace natural gas for heating, and using natural gas to replace gasoline for propelling vehicles, at least until hyrdrogen and electric cars become perfected (still a ways away).

In the fall gas prices will probably drop as the summer driving season ends, but the days of cheap gasoline, jet fuel and heating fuel are probably gone forever.

JPRICHVA you can look at it that way if you want to compare historical prices or you can look at it today - if Oil is 140 a barrel then 40 of that is purely due to the dollar devaluation. Yikes. That's a certain definitive number. Speculation or lack of refining capacity or overdemand/undersupply - are all other factors that can't be pinpointed to a specific value.

So yeah when our Fed Chairman adjusts cashflow and interest rates to try to optimize inflation and growth in this country - all good things - the result is sometimes the result we are seeing with the dollar devaluation. This isn't a complete explanation - but one reason the dollar is so low is if we have such super low interest rates here - then why would any want out dollar. Foreigners put there money elsewhere and that just drives the dollar down further. Of course - like gas - there's a dozen factors to the dollar's devaluation.

I knew you guys would have some understandable info. Thanks !!! Is it correct that our dollar isn't backed by gold or other prescious metals? (like back when I was a kid we still had "silver certificate" surrency, where supposedly a person could take his silver certificate dollar and turn it in for real silver. (this may be a simplistic illustration, but its "where I am" on the subject, LOL !!!) So now what's our money based on? World confidense?? so this war shook the worlds "confidense" and down goes the dollar? Is there even a little of this at play in our dollar losing value? If they peg a barrel of oil to the Euro instead of the dollar, won't that cause the dollar to devalue even more? Seems like we're "in a world of hurt" or to use a more current term, "WE ARE FUCKED" LOL !!!!!!!!